MX-5 OC Forum

If you download the excel spreadsheet from this link ...

 http://www.dft.gov.uk/statistics/tables/tsgb0121

... it will give you the same breakdown from 2000/2001 (financial year) to 2010 (calendar year). Over that period it looks like we have reduced spend on new cars (£23.20 per household per week in 2000/01 to £19.50 in 2010) but increased the amount we spend on fuel (from £15.80 in 00/01 to £21.60 in 2010). In those ten years, the total spent per household per week on motoring has gone from £47.20 to £52.80, which seems about right for a decade's worth of natural inflation.

The point seems to be this - fuel is part of our total motoring bill. As the cost of fuel goes up, we have the option of spending less on the purchase of our cars. And that seems to have been precisely what we have been doing.

Sad geek that I am but I find these stats fascinating. Then again, it is a part of my job.

http://media.rac.co.uk/pdf/rac-cost-of-motoring-index-2011.pdf

http://www.telegraph.co.uk/motoring/columnists/mike-rutherford/8921407/Mr-Money-RAC-wrong-on-the-true-cost-of-car-ownership.html

The rise in the cost of car insurance can be explained, although you are quite right that there is an element of insurance companies making money because they can.

The first problem that insurers have been facing is the rise of "no win, no fee" compensation companies. In a time of recession we see a massive increase in petty crimes that raise relatively small amounts of cash - eg door to door sales scams, metal thefts and insurance scams. The motor insurance industry has been hit hard by an increase in the number of whiplash claims and similar. We are all a little bit (in some cases a lot) more skint than before. So we are looking for ways to boost our income. Then you spot an advert on daytime TV promising thousands if you have been involved in an accident that wasn't your fault.

And who pays for it? We do - the honest punters who don't claim through these companies. The extra costs are passed on through higher insurance premiums.

Then there is the cost of re-insurance. Most insurance brokers take out their own insurance on their liabilities - in order to be able to cover their debts if they get lots of claims. In the past, banks have bought into this reinsurance market - not just for car insurance but also for mortgages, home loans, credit cards, etc. That's what started the banking crisis - too many banks had bought into the so-called toxic debts, such as reinsuring mortgages on overpriced homes in Mexico and the self-declaration mortgages in this country.

All of this means that banks are far less likely to want to reinsure, which again pushes up the price of car insurance.

Insurance is a fairly competitive market because all the price comparison websites make it difficult to hide higher than average premiums. They will offer ridiculously high premiums to someone if they really don't want their business. And they will charge what the market will bear. But at least a proportion of the rise in insurance costs are genuine.

H'mm - so it would seem there's two solutions to all these price hike problems - 1) Give in (like a true Englishman) or 2) - - - -

Lay down and die - - - - - 

Any wonder that quite a few are now coming up with an alternative solution - -  steal something and use it - or flog it.

I don't see an answer to rising insurance costs, unless we are all prepared to risk driving without insurance - which is a criminal offense in any case, so in the end, 'they' get you one way or another.

Andy - was unaware of the AA involvement in the Fair Fuel Price Campaign - it's not shown on the FF mail outs - do you have proof of that? (interested, not questioning your knowledge) Also - I was unaware the RAC were now in insurance hands. though I don't belong to either organisation now, again due to rising costs, like house insrance, you pay in far more than you ever get out, unless you are prepared to commit arson - again a criminal offense.

However, I know of at least one person who said to me years ago: "House insurance costs? - I make sure I claim on something every year, that's one way to get my money back!" - He then cited one example - "We had a mattress we didn't like, so I poured some tea on it and claimed for a new one" - Previously I thought this person of high moral standards, but that changed my opinion, seeing as how it's folk like him that help my premiums to rise each year. If he's now in this Club, or a contributor to this forum - tough - I won't aplogise for mentioning it.

So yes - to AT's earlier comment that a campaign to fight rising car insurance costs was merited, I agree, but we would be fighting a lot of companies, whereas fighting fuel taxation just means we are fighting the Government - not that this is easy either! Oh - and it's not political, I don't care who's in power, past experience shows taxation is passed from one ruling party to the next without much argument about it - -  "what the people will pay" rules the day.

Not pertintent to this thread, but just been on Stobarts website - which bears a banner : "At any time, we have 37,000 tyres in use" - can you imagine the replacement cost per annum? (Never mind any bulk discount - or fuel costs!)

Give in? No, never. We just need to choose which battles to fight ...

There is a way to fight rising insurance costs, and that is to be a militant rate tart. Keep ringing round until you get a competitive quote. And when you have got that quote, go back to the second best quote and ask them to beat it. And repeat this at renewal time, even if the renewal quote looks reasonable. Keep pushing em to go lower.

And when you've got a good deal, tell all your friends about it. Use this website to spread the news.

If enough people did this, the insurance companies charging the high premiums would soon start losing business to the cheaper companies. You see, they rely on the natural human instinct not to complain and to take the easy way out. So they offer ridiculously high quotes to people they don't really want to insure. They also charge existing customers more in order to charge new customers less. The trick is to be one of the new customers whose business they are fighting for.

The same trick works with fuel. Wherever possible avoid filling up at the really expensive petrol stations on motorways and busy A roads. Let everyone else do that because it's the easiest thing to do.

And it goes without saying that the car you should be driving is a modern classic with very little depreciation.

As for taxation, we have to realise that we need to pay taxes. It's not a matter of fighting the Government, it's about paying for the services that we need. The trick here is to fight for things that are winnable. The fuel price protest in 2001 worked. The labour Government of the day were truly rattled by it. They saw it as their poll tax riot and promptly scrapped their previous policy known as the fuel duty escalator. But the world has moved on - whatever Govt was in power right now would need to tax fuel. So the protest needs to be a lot more sophisticated than it was in 2001. And I just don't see the current lot of agitators being that sophisticated. Their arguments are pretty crude and simplistic.

Once:

The rise in the cost of car insurance can be explained,

although you are quite right that there is an element of insurance companies making money because they can.

The first problem that insurers have been facing is the rise of "no win, no fee" compensation companies. In a time of recession we see a massive increase in petty crimes that raise relatively small amounts of cash - eg door to door sales scams, metal thefts and insurance scams. The motor insurance industry has been hit hard by an increase in the number of whiplash claims and similar. We are all a little bit (in some cases a lot) more skint than before. So we are looking for ways to boost our income. Then you spot an advert on daytime TV promising thousands if you have been involved in an accident that wasn't your fault.

And who pays for it? We do - the honest punters who don't claim through these companies. The extra costs are passed on through higher insurance premiums.

Then there is the cost of re-insurance. Most insurance brokers take out their own insurance on their liabilities - in order to be able to cover their debts if they get lots of claims. In the past, banks have bought into this reinsurance market - not just for car insurance but also for mortgages, home loans, credit cards, etc. That's what started the banking crisis - too many banks had bought into the so-called toxic debts, such as reinsuring mortgages on overpriced homes in Mexico and the self-declaration mortgages in this country.

All of this means that banks are far less likely to want to reinsure, which again pushes up the price of car insurance.

Insurance is a fairly competitive market because all the price comparison websites make it difficult to hide higher than average premiums. They will offer ridiculously high premiums to someone if they really don't want their business. And they will charge what the market will bear. But at least a proportion of the rise in insurance costs are genuine.

No, not complicated. Just market forces. The information is all out there. The trick is not to discount it simply because you have an issue with this industry. Some (most?) of what they are telling you is true.

I don't hanker after local insurance agents one little bit. They may have seemed like they were on your side, but they were also taking a slice.

Once:

Give in? No, never. We just need to choose which battles to fight ...

There is a way to fight rising insurance costs, and that is to be a militant rate tart. Keep ringing round until you get a competitive quote. And when you have got that quote, go back to the second best quote and ask them to beat it. And repeat this at renewal time, even if the renewal quote looks reasonable. Keep pushing em to go lower.

And when you've got a good deal, tell all your friends about it. Use this website to spread the news.

Once:

No, not complicated. Just market forces. The information is all out there. The trick is not to discount it simply because you have an issue with this industry. Some (most?) of what they are telling you is true.

I don't hanker after local insurance agents one little bit. They may have seemed like they were on your side, but they were also taking a slice.

I think we will need to agree to disagree, on many of the issues raised here. You seem very set in your views. And your view of the world seems quite a negative one that I don't share.

But taking up electric cars to rattle the Government? No, no, a thousand times no. It just doesn't work that way. Firstly, it would take a massive shift to electric vehicles to make the slightest dent in fuel duty income. And we don't have anywhere near the charging infrastructure to support that.

And even we did manage to do that, the Government would simply switch the duties around to make sure that they collected enough income. Electrics and LEVs (low emission vehicles) are only cheap at the moment because there are relatively few of them and the Government want to encourage their adoption. As they get more numerous the tax advantages will slowly be eroded. Remember what happened to the much lower fuel duties for diesel?

The fuel duty escalator was a Tory invention which was then wholeheartedly endorsed by the 1997 Labour Government in their pro-environment 1998 Transport White Paper: "A New Deal for Transport; Better for Everyone." And it was dropped almost overnight in the face of the 2001 fuel price protests because the Government of the day thought they could make up the financial deficit elsewhere. I know. I was there.

As to making the best use of your vote, it doesn't really matter whether you vote in a coalition, Labour or Conservative. Hell, for that matter we could have had the greens or the BNP or the monster raving loony party. We could have even had you and me. Whoever had won the last election would have been faced with the same financial problems and would have come up with more than 80% of the same measures to tackle them. Because frankly we don't have that much choice.

On the first day of every new Government, the incoming Ministers at each Government department are handed a confidential file. This file has been prepared by the senior civil servants at that department during the election. It tells them what they will need to do to implement their manifesto promises. And, trust me on this one, the file prepared by Treasury and DfT officials would have said much the same this time around, whoever had won the election.

I've been on the inside of central Government. Believe me, a lot of what the Government (any Government) says would have been exactly the same under any other party. It is all very easy to be suspicious of Government and to think that they are either massively incompetent or corrupt. And, sure there is some incompetence and corruption in the system. But a fairly high proportion of what you are being told is true, whether you believe it or not.

AT:

A good move would be for the government to adopt the Japanese system; where third party cover is bundled, at a flat rate, into the cost of an annual vehicle inspection. Owners then take out Comprehensive/All Risks cover as they deem appropriate.

This is pretty much what happens in Australia, the Road tax includes third party cover, then you do whatever you like about other risks.

A lot of people here knocking insurers, but motor cover has never been easy to make money on. We have a competitive industry, if there were easy profits to be made, you would see the likes of Richard Branson, or Alan Sugar starting an insurer (and you don't). Also the mutuals like LV or Co-op would be able to undercut everyone else (and they don't). Look at the annual accounts of major insurers (these are all online these days) and you will see that they sometimes have to subsidise motor from their household, or other lines of business.

Why is motor insurance expensive? Personal injury claims (and the packs of lawyers circling around), high repair costs (I had a quote of £549 for a tiny paint crack in the bumper). I actually don't find my motor insurance at all expensive, but this is because they are targetting the risks more precisely, so younger drivers in cities pay huge amounts etc. This is perhaps a problem - a lack of smoothing out, but it's a consequence of the "shopping around for quotes" that acts against any cross-subsidy.

zpat:

A lot of people here knocking insurers, but motor cover has never been easy to make money on. We have a competitive industry, if there were easy profits to be made, you would see the likes of Richard Branson, or Alan Sugar starting an insurer (and you don't). Also the mutuals like LV or Co-op would be able to undercut everyone else (and they don't). Look at the annual accounts of major insurers (these are all online these days) and you will see that they sometimes have to subsidise motor from their household, or other lines of business.

Why is motor insurance expensive? Personal injury claims (and the packs of lawyers circling around), high repair costs (I had a quote of £549 for a tiny paint crack in the bumper). I actually don't find my motor insurance at all expensive, but this is because they are targetting the risks more precisely, so younger drivers in cities pay huge amounts etc. This is perhaps a problem - a lack of smoothing out, but it's a consequence of the "shopping around for quotes" that acts against any cross-subsidy.

Very well put!

I think it is a natural consequence of a highly competitive market that we get a wide range of costs - from the very reliable mature driver in a sensible car who rarely if ever makes a claim, through to the younger driver in a fast car who is likely to make many claims. If you are in the first category that is a very good thing. If you are in the second category, it isn't.

I must say that I don't like the idea of a mandatory average insurance premium. Purely for selfish reasons, as I enjoy being in the cheaper end of the spectrum. Why should I pay for other people's risks?

Once:

The fuel price protest in 2001 worked.

It wasn't exactly a long term solution though, was it? Although it did prove that people were happy to pay £10/litre if they had to.

 I've just spent some time on the FF website - read a lot (but not all) of the individual comments from members of the public - overall - people are screaming about the cost of fuel, ranging from the 70 year old pensioner who gives up a lot of his time to help other pensioners - and is now struggling to help anyone, to the average householder who is economising on household expenses so he can still drive to work - no local bus, and the train costs more than the fuel! Other than supporters on here - I felt alone - - - not any more!  Go read some> > > www.fairfueluk.com